Like all the core Dizzy games, the character is able to move and jump through a world full of dangers and puzzles to solve. The underlying concept of Fantasy World Dizzy is that all of Dizzy's friends (the Yolkfolk) have been magically ensorcelled with various fairy-tale curses and Dizzy must rescue them all.
The game is non-linear, allowing the player to travel in any direction they wish. However, certain obstacles will restrict movement around the map until they are dealt with. This can be done by collecting items (Dizzy has inventory space for three) and applying them where necessary to solve puzzles and facilitate progress. Eventually, Dizzy must find all his friends, use items to rescue them from their various enchanted plights and then finally locate his girlfriend Daisy. For the best ending, Dizzy must also have collected 30 gold coins scattered throughout the game, usually in hard to reach or well-hidden places.
Internet critic Ben "Yahtzee" Croshaw often calls the game one of his favorites.